BME posts a net profit of €83.7 million in the first half, up 16.3% year-on-year

The best six-month result in the last three years

1 August, 2014

•   First half-year revenue, at €169.5 million, increases by 10.5% year-on-year

• In the second quarter the net profit was €41.5 million while revenue reached €83.5 million, posting growth rates of 6.5% and 4% respectively

•  The efficiency ratio at end-June 2014 improves, at 29.5%, 20 points above the sector average while ROE for the period was 41.5%, more than 27 points above the sector average

•  BME to distribute its first interim dividend on 12 September, a gross €0.40 per share

BME reported net profit of €83.7 million in the first half of 2014, up 16.3% from the same period in 2013, marking the best half-yearly result in the last three years. The net profit for the second quarter came in at €41.5 million, 6.5% higher year-on-year.

Revenue for the first half, at €169.5 million, were 10.5% up from the same period in 2013 while in the second quarter it rose 4% to €83.5 million. Growth has been driven, to a large extent, by the increasing equity trading, which hit a half-yearly high of 33.8 million trades. ETF trading also reported six-month record highs, in terms of effective trading volume and number of trades. The rise in liquidity keeps narrowing bid-ask spreads on the Spanish exchange, thus reducing the implicit transaction cost.

Operating costs in the first half of the year totalled €50 million, down 1.6% year-on-year. In the second quarter operating costs, at €24.8 million, were 3.1% lower than in the same period the previous year.

EBITDA for the first half amounted to €119.6 million, up 16.5% on the same period a year earlier, while the second quarter figure of €58.7 million was up 7.2% year-on-year.

As for the performance of the main indicators for tracking financial management, the efficiency ratios improve, at 29.5% and 29.7% for the six-month period and quarter, respectively, (20 points above the sector average). Return on equity (ROE) at the end of the first-half was 41.5%, a 5.9% year-on-year improvement and more than 27 points above the sector average.

The cost base coverage ratio with revenue not linked to trading volumes ended the first half with 117% of BME’s cost base covered with this type of revenue, up 5 points from 2013. BME will distribute its first interim dividend on 12 September, a gross €0.40 per share.

EQUITY

Trend in the ownership structure in Spain shows that non-resident investors are the main owners of shares in listed Spanish companies, at 40.1% of their market value, with a participation 3 points higher than the EU average, and that households are the second most relevant share owners, at 26.1%, exceeding by 6 points the figure for 2007, at the start of the crisis.

Revenue generated from trading and listing in the first half of 2014 amounted to €79.1 million, up 26.5% year-on-year and €37.5 million (+22.8%) for the second quarter.

EBITDA for the same periods rose by 37.4% and 31.9%, respectively, to €59.6 million and €27.8 million.

Turnover for the first six months of 2014 was €417.4 billion, up 27.7% year-on-year.

SETTLEMENT

Total settled, registered and other revenue for services to issuers in the second quarter led to total revenue at the business unit of €20.9 million, (-15.9%) year-on-year and €41.1 million (-5.3%) in the first half of 2014. EBITDA amounted to €16.7 million and €33.1 million for the second quarter and for the first half of 2014 respectively, representing decreases of 21.8% and 9.5% year-on-year, respectively. Excluding the effect of default management revenues, unit´s revenues went up 7.8% and EBITDA 5.6%.

A total of 26.5 million transactions were settled to the end of June 2014, up 20.4% from a year earlier.

CLEARING

Clearing activity in the different products managed by the unit generated revenue of €42.2 million, up 10.6% from the same period in 2013. To the end of June revenue totaled €8.9 million, up 17% from the same period a year earlier.

Unit costs rose by 50.6% in the second quarter due to the recognition of certain costs associated with projects and non-recurring items, reducing EBITDA (€2.1 million) by 13.6% with respect to the second quarter of 2013, while EBITDA in the first half rose by 10.7% to €5.2 million.

INFORMATION

The number of end-users at the end of the second quarter grew 26.7% from the previous year.

The rise in the number of clients has had a positive effect on the unit’s revenue, which in the second quarter increased 13% to €9.4 million and to the end of June it totalled €18.3 million, up 11.3%. EBITDA grew 13.2% during the second quarter and 11.2% during the first half, compared to the same periods in 2013.

DERIVATIVES

Revenues for the Derivatives business unit for the second quarter totalled €3 million, up 0.5% year-on-year, while the six-month figure amounted to €6.3 million (+4.6%). EBITDA for the second quarter decreased 2.5% to €1.7 million and it rose 7.8% in the first half to €3.5 million.

The total volume of contracts traded through the derivative product business unit in the second quarter grew 10.9% with all product lines reporting significant year-on-year growth rates.

FIXED INCOME

Revenues obtained in the first half of 2014 totalled €6.1 million (-3.8%) and €2.8 million in the second quarter (-14.9%). EBITDA decreased 1.6% year-on-year in the first half to €3.5 million, and declined by 21.8% in the second quarter, to €1.5 million.

The Alternative Fixed Income Market (MARF), which commenced its activities at the end of 2013, continues to incorporate new participants and issues. At the end of the first half, it had 16 Market Members, 15 registered Advisers, two issues maturing at five years (a total of €85 million), two promissory note issue programmes, with a maximum balance of €129.5 million and eight promissory note payments (€60 million).

IT & CONSULTING

Revenues from the IT and Consulting unit amounted to €4.8 million in the second quarter, down 2.5% year-on-year. Revenue improved by 27.4% on the first quarter of the year, moderating its fall to 8.2% in the cumulative figure to June. EBITDA for the second quarter was 9.4% lower, at €2.1 million while in the first half it totaled €3.2 million.

In the international consulting area, the awarding of a securities market infrastructure consulting project and the SMART platform implementation agreement on the Bolivian stock market were combined with the modernisation project for the Algerian Government Debt market.

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